I was looking over the supply of houses on the market this week in Fairfax County, Virginia and it’s really getting dangerously low. Compared to May of 2008, we have 55% fewer homes on the market – and 20% more contracts written on them.

That leaves home buyers with only a 7-week supply of houses and it’s getting smaller. Officially – we’re in a sellers’ market. For pocket markets (townships, subdivisions, etc.) it’s as hot a market as it was in the peek of 2005-2006 – it’s just that the prices are much lower. Ergo – the opportunity. If you’ve ever heard about buy low, sell high – now is the time to buy low.

The same is true across the country. Pending sales are up all over Florida, in Seattle, Phoenix, Los Angeles, Las Vegas, you name it, and buyers are coming off the fence like they were stung by a bumble bee!

For a macro look at how this can benefit you – consider the suburban Washington DC market of Fairfax Countty. If you are sitting in a house purchased in 2000 or earlier, you’re most likely sitting on a lot of equity that could enable you to move up to a larger home with the upgrades you’ve wanted but couldn’t afford.

I know – this sounds like a sales pitch – but frankly – it’s just the simple truth. Sellers and buyers have a unique opportunity to purchase a house at prices that have been backed up several years and at interest rates not seen for decades (currently in the mid-5% range).

The average price of a 4BR, 2BA house in Springfield, VA, for instance, sold for $235,665 10 years ago. Today, that same house sells at $371,549. While this price is down from the last five recent years, the pricing has leveled and starting to rise in pocket markets throughout Northern Virginia.

And if you’re wondering if the market has turned around consider this – the average days on market for that house in Springfield is down to 18 days. That is not a misprint – NOT 180 Days, but 18 Days – a little over 2 weeks. Many other towns in the area are in the same situation.

So what?

Inventory is beginning its dip downward because buyers are coming off the fence, the foreclosure rate in the Northern Virginia area has been cut nearly in half (see www.CRA-GMU.org) and

Regular owners have not yet decided to place their homes on the market yet.

We are experiencing multiple offers (7 – 10 is not unusual, we’ve seen upwards to 35)

Escalation offers are back – one of my team members lost a bid after escalating $75,000!

Just remember DON’T MAKE A LOCAL DECISION BASED ON NATIONAL INFORMATION!

4 comments

If you look at the income of renters in FFX county in 1998 versus 2007, based on the ACS (census) survey of the DC area (FFX County is one of the sub-regions) there were 14,000 excess renting households in 2007 making more than 100k year (compared to 1998). That's 14k fence-sitters (some of whom have already bought since 2007, but you get the point).

Even if you compare this to how many more people became homeowners by 2007 than 1998, that's only 11,000 more home-owning households that might have stretched themselves to buy earlier than was prudent. That's still 3k more fence-sitters than potential foreclosures.

It's a seller's market and it's here to stay. Fueled by households making over 100k. (there's no excess for the 50-100k group).

More subtly, the REO's should be concentrated among the streched buyers in the lower-level housing stock, while the demand will be from the higher earning renters. Now's a great time to sell a slightly up-market house. A lot of the 100k+ earners are not going to even consider the starter TH's that are going into foreclosure.

It's right there in the census data on household make-up, staring us in the face.